Have you built long-term care costs into your holistic wealth strategy? If not, this is an important thing to consider. Research suggests that most Americans turning 65 this year will need at least some form of long-term care as they age,[1] and long-term care is enormously expensive.

However, you have options to build long-term care strategies into your retirement plan without totally breaking the bank, and Beacon Wealth Management can help you discover the right strategy for you. Read on to learn more about your options and prepare for a discussion with us about which long-term care option will best fit into your holistic wealth strategy.

How Much Does Long-Term Care Really Cost?

The true cost of long-term care depends on the type of care needed and the location in which long-term care services are received. It’s impossible to predict what type of care you may or may not need, but you should know that the cost of long-term care can range anywhere from $75 to over $290 a day depending on the type of care needed.[2]

In monthly terms, the national median costs of long-term care range from around $1,600 per month for adult day care services to around $8,800 per month for a private room in a nursing home.[3] As you can see, the monthly cost of a private room in a nursing home is far higher than most people’s mortgage payments.

And in states with higher costs of living, such as California and New York, the cost for long-term care services is even more expensive. Clearly, you’ll need to do strategic planning to prepare for the possibility of these costs.

Discovering Your Ideal Long-Term Care Solution

However, the first step is to plan out your ideal long-term care solution and work backward from there. This method is similar to retirement planning. By picturing your ideal vision for retirement (whether you want to travel or spend most of your time relaxing at home, for example), you can create strategies to save the amount you need and increase your chances of achieving that particular vision.

The same method works well for long-term care planning. If you know you want to be able to stay in your home, you may need to plan for hiring an in-home care specialist as a possible eventuality. If your family has a history of Alzheimer’s, then you’ll want to plan for the costs of needing memory care in the future.

Whatever your ideal (and trust us, we know that not needing long-term care would be the ideal), it’s important that you share this plan with your family, especially if a family member is included in your ideal long-term care plan. Having your family on board will ensure that your wishes are met.

Long-Term Care Planning Strategies

Because planning for long-term care is an increasingly important component of holistic wealth strategies, many people are turning to long-term care insurance as an affordable way to build anticipated long-term care expenses into their plans. Others are saving for the costs themselves.

Below, we briefly outline four options to build long-term care planning into your holistic wealth strategy. As you learn more about each option, think about how that option might align (or not) with your ideal long-term care solution.

Standalone Long-Term Care Policies

Long-term care insurance isn’t usually provided by employers, so it’s a type of insurance that most people have to search out and learn about on their own. Long-term care policies have traditionally been expensive, ranging from about $3,000 to over $8,000 per year in premiums for a couple aged 55.[4] These premiums are in addition to life insurance premiums you already pay.

Standalone long-term care policies are also notoriously complex. Some companies, such as New York Life, are beginning to offer simplified policies. Standalone policies may be good options for those who can afford them, but there are drawbacks to standalone policies, including the risk that you will pay a lifetime of expensive premiums for insurance you may never use.

Long-Term Care Riders

To accommodate some of these drawbacks, some whole life insurance policies offer a policy add-on called a long-term care rider, also known as a hybrid policy. Hybrid policies are more likely to maintain stable premiums and often come with a death benefit, so the premiums don’t go completely unused if you pass away without ever needing long-term care.

Long-term care riders are also typically more affordable than standalone policies. However, adding a long-term care rider to a life insurance policy may require you to pay a large lump-sum premium up front when purchasing the policy.

Annuities With Long-Term Care Benefits

Finally, some fixed and indexed annuities offer contracts that will pay more per month if you ever need long-term care. For example, if you own an annuity that pays you $2,000 per month and then start needing long-term care assistance, your annuity would begin paying an additional amount per month to help cover the long-term care costs.

Annuities do not usually pay returns that are better or even come close to returns on other types of investments, but some people prefer the security of knowing they will always receive a monthly payment for the duration of their life. If you are considering purchasing an annuity or already own one, it may be worth looking into options to add long-term care benefits to the contract.

Save on Your Own

Of course, you can always plan to save for long-term care on your own. Planning to pay for these costs with your retirement assets allows you the flexibility to use that money for other things if you don’t end up needing long-term care.

But no one can predict the future, and because the costs for long-term care are tremendous, it can be difficult for most people to save enough with confidence that all their needs will be met if the need for long-term care should arise.

Strategize With a Wealth Advisor

At Beacon Wealth Management, we understand that planning for the possibility of long-term care is an incredibly important part of your overall retirement plan. But we are here for you as you evaluate your options and seek answers to your questions. If you’re feeling overwhelmed by building the massive expense of long-term care into your wealth strategy, call (304) 626-3900 or email me at jhalterman@bwmwv.com to get our help!

About John

John Halterman, best-selling author and nationally published blogger has been featured as a financial guest expert on the TV shows of self-help gurus Brian Tracy and Jack Canfield, author of Chicken Soup for the Soul. He has appeared on ABC, FOX, BRAVO, NBC, CBS, and A&E.  John is the expert host of the weekly WDTV News 5 segment, “Solutions 4 Financial Independence.”

As an authority on wealth management, he has been invited by hundreds of institutions such as universities, federal agencies, professional associations, and large energy and utility corporations to be a guest speaker and educational event host. Event topics include maximizing your retirement, managing down market investment risk, how to reduce your tax burden, and transferring your family wealth in the most tax advantageous way.

John is the founder and owner of Beacon Wealth Management, specializing in helping entrepreneurs, professional practitioners, and retirees overcome the 4 major challenges facing successful families. He is a warm communicator with a passion for helping people transform their financial futures. John understands the multifaceted set of financial worries people face as they become more successful and enter the retirement red zone. He empathizes personally with each client and delivers a collaborative client experience that empowers people to reach their life goals.

With more than two decades of experience, John’s professional credentials include:

  • Certified Wealth Strategist (CWS)
  • Accredited Investment Fiduciary® (AIF®)
  • Certified Estate Planner™ (CEP®)
  • Chartered Federal Employee Benefits Consultant℠ (ChFEBC℠)
  • Professional Plan Consultant® (PPC®)
  • Registered Financial Consultant (RFC)
  • Past member of Ed Slott’s Master Elite IRA Study Group

A native of Weston, West Virginia, John served in the United States Air Force prior to becoming a Wealth Advisor. Today, he resides with his family in Bridgeport, West Virginia. He and his wife, Lisa, have been married since 2005 and have three amazing children. A family-loving man, he enjoys giving back to his community, coaching youth sports, landscaping and architectural design, WV Athletics, and is an outdoor and racquetball-playing enthusiast.

[1] https://acl.gov/ltc/basic-needs/who-needs-care

[2] https://www.genworth.com/aging-and-you/finances/cost-of-care.html

[3] https://www.genworth.com/aging-and-you/finances/cost-of-care.html

[4] https://www.aaltci.org/long-term-care-insurance-rates/

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